* FTSEurofirst 300 falls 0.7 percent, hits 1-week low
* Iraq crisis, chance of early UK rate hike hit sentiment
* Travel, leisure and property stocks among top decliners
By Atul Prakash
LONDON, June 13 Europe's top share index headed
for a weekly drop after gaining for eight straight weeks, with
escalating conflict in Iraq hitting travel stocks and the
prospect of an early rate hike in the United Kingdom hurting
property shares on Friday.
The pan-European FTSEurofirst 300 slipped to a
one-week low, moving further away from this week's 6-1/2-year
high. It was down 0.7 percent at 1,382.78 points by 1051 GMT
after falling to a low of 1,381.86, the lowest since early June.
Travel and leisure stocks led the market lower, with the
European sector index falling 2.3 percent after growing
tensions in Iraq hit sentiment and boosted oil prices.
"The market was looking for an excuse to take profits after
a rally to new highs and tensions in Iraq gave investors an
opportunity to trim their positions," Philippe Gijsels, head of
research at BNP Paribas Fortis Global Markets in Brussels.
"America may send a few fighter planes to help Iraq, but it
doesn't look like the start of a new Iraq war. I don't see a
sharp pull-back in the market. Shares could fall another 3 to 5
percent in the near term before bouncing back."
U.S. President Barack Obama threatened military strikes in
Iraq against Sunni Islamist militants who have surged from the
north to menace Baghdad and want to establish their own state in
Iraq and Syria.
British Airways owner International Airlines Group,
Germany's Lufthansa and budget airline firm easyJet
, down 3.7 to 4.1 percent, were among the top decliners
on the FTSEurofirst 300 index.
British property companies also came under selling pressure
after Bank of England Governor Mark Carney said UK interest
rates could rise sooner than financial markets expect and the
bank would consider tackling housing market risks, including an
undesirable loosening in mortgage underwriting standards.
British Land and Land Securities fell 3.6
percent and 3.5 percent respectively.
Analysts advised caution, which was also reflected in a
rally in European volatility index, investors' main fear
gauge and a measure to insure against future swings in shares.
The index rose more than 9 percent after falling to a low not
seen since December 2006 this week.
"I'd rather be short (European stocks) at the moment,"
Hobart Capital Markets broker Justin Haque said. "The market has
lived in a blissful state but we're not short of warning signs:
there's a war in Iraq and Carney wants to raise rates."
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Additional reporting by Francesco Canepa; Editing by Toby